China Unicom takes on Apple, adds record number of smart phone subscribers

China's No 2 carrier, China Unicom Hong Kong Ltd, is pushing smart phones costing 80 per cent less than Apple Inc's iPhone and in the process is adding a record number of high-speed wireless subscribers.

The company started winning customers from market leader China Mobile Ltd after it switched focus from high-end users of the iPhone to those who cannot afford the device. It started selling handsets from local manufacturers Huawei Technologies Co and ZTE Corp costing less than 1,000 yuan, which works out to around half a month's salary for an urban worker.

The strategy helped make China Unicom the best-performing stock on the benchmark Hang Seng Index last year with a 47 per cent increase and also accelerated the shift to high-speed networks in China. The move also put China on course to surpass the US in smart phone users and enable Huawei and ZTE to compete against Apple in their home market.

Analysts say people aspire to own an iPhone, but cannot afford it. However, if a vendor were to offer a phone that could do most of the things a high-end device could do there was no reason why people would not buy.

iPhones continue to be popular among those who can afford them in China. China Unicom is the only carrier offering the device with a service contract, but the company is down 11 per cent this year after customers frustrated by not being able to buy the new iPhone 4S pelted Apple's main Beijing store with eggs, which led to the handset maker pulling all phones from its store shelves.

Apple also said its application for a phone that would work on China Telecom's network was moving through the approval process.